The Medicare Balancing Act

If your doctor’s office has recently brought a fitness trainer into the practice, it may be a sign of the economic times for healthcare.

Insurers, providers, the federal government—all are driving the industry to emphasize prevention, says Gary Young, professor of strategic management and healthcare systems and director of Northeastern’s Center for Health Policy and Healthcare Research. Getting Americans off their couches and onto exercycles is no small part of that effort.

Cost containment is the primary impetus. Everyone has a stake in seeing this effort succeed, but more so if you are in your 40s or 50s and not wealthy: Medicare is not sustainable under the status quo, says Young, who teaches in the D’Amore-McKim School of Business. Reform could mean restructuring—raising the eligibility age, premiums, deductibles, or copays, or shrinking coverage, says Young—or a complete remake, along the lines of the Republicans’ voucher plan.

The need to rein in healthcare costs is, by now, a familiar story, and demographic trends promise no relief. Enrollment in Medicare is set to grow by an average of 1.6 million people annually. Nearly half the U.S. population has one or more chronic health conditions. And two-thirds of adults are either overweight or obese, elevating their risk for chronic ailments.

Insurers are adopting new reimbursement models—caps known as global budgets and incentives focused on outcomes rather than volume—as well as policies to limit expensive drugs and costly diagnostic imaging.

These shifts might be starting to take hold, as the Congressional Budget Office reported in early February that healthcare spending growth continued at the lowest rate in decades for the fourth consecutive year.

Young agrees with analysts who say the slowdown could be due in part to cost containment efforts. But he also notes that when the Affordable Care Act takes full effect, it will actually increase healthcare costs in the short term by bringing millions of new patients into the system.

“You can hope that everyone in the country starts exercising and eating healthier,” says Young. But unless you’re already retired or very near it, “plan for your future with the idea that Medicare won’t be available” in its current form.